Surcharge on Income Tax – Latest Surcharge Rates in India

The Union Budget 2017-18 may have brought some relief to tax payers through the reduction in Income Tax slab rate from 10% to 5% for income slab of Rs. 2,50,000/- to Rs. 5,00,000. At the same time, it also increases the surcharge to taxpayers with taxable income between Rs. 50,00,000/- and Rs. 1 crores. A surcharge of 10% over the tax payable was introduced for such taxpayers. A surcharge of 15% has been left unchanged for those whose taxable income exceeds Rs 1 crore. Hence, the only income group which is likely to be displeased with this tinkering in Income tax rates is those with taxable income between Rs. 50 lacs and Rs. 1 crore.

Surcharge on Income Tax

The Surcharge is levied only if Income is more than Rs. 50 Lakhs in case of Individuals and Rs. 1 Crores in a case of Companies. The Surcharge rate has been increased in the Union Budget-2017 which is applicable for FY 2017-18. Different Surcharge rates shall apply for particular categories of taxpayers. Check out the Surcharge on Income Tax and the current Surcharge rates in the following section.

Income Tax Surcharge on Individuals, HUF’s, AOP, BOI, and AJP

The surcharge on Income Tax is highest for individuals and HUF is 15% for the Financial Year 2017-18. Till the financial year 2014-15 the income tax surcharge was 10%, but in the FY 2015-16, the government abolished wealth tax and increased the surcharge on income tax by 2%. In the latest budget 2016, the surcharge was further increased to 15%.

Income Slab

Surcharge on Income

Less than Rs. 50 Lakhs

NIL

Rs. 50 lakhs to Rs. 1 Crore

10%

Above 1 Crore

15%

Income Tax Surcharge on Firms, Co-operative Societies, and Local Authorities

Surcharge Tax for Firms, Co-operative Societies, and Local Authorities on FY 2017-18 here.

Income Slab

Surcharge on Income Tax

Less than Rs. 1 Crores

Nil

More than Rs. 1 Crores

12%

Income Tax Surcharge for Domestic Company

Know all about the surcharge on income tax for FY 2017-18 for Domestic Company.

Income Slab

Surcharge on Income Tax

Less than Rs. 1 Crores

Nil

Rs. 1 Crore to Rs. 10 Crores

7%

Above Rs. 10 Crores

12%

Income Tax Surcharge for Foreign Company

Get the complete details regarding surcharge for AY 2016-17 and FY 2017-18 in the following section.

Level of Income

Surcharge on Income Tax

Less than Rs. 1 Crores

Nil

Rs. 1 Crores to Rs. 10 Crores

2%

More than Rs. 10 Crores

5%

When will be the Surcharge applicable on Income Tax?

Surcharge on Income Tax shall apply for all taxpayers earning income above Rs. 1 Crore. The Finance Act 2013 introduced the levy of Surcharge on Income Tax on all categories. Earlier this Surcharge was levied only on Companies, but now it is levied on everyone whose income is more than Rs. 1 Crore.

What are rates of Surcharge on Income Tax for AY 2016-17 & 2017-18?

Rates of Surcharge vary for different categories of taxpayers. The Surcharge on Income tax is at the rate of 10% for all taxpayers except Domestic Company (5%) and Foreign Company (2%) up to the Assessment year 2015-16. For Assessment Year 2016-17 and 2017-18, the rates are as follows. Know all about the surcharge for AY 2016-17, and Surcharge on Income Tax AY 2017-18 in the following sections.

Surcharge on Income Tax for AY 2016-17 & 2017-18

The surcharge for AY 2017-18 is same as that of AY 2016-17 rates except for local authorities.

For Individual, HUF, Firms, Co-operative societies:

The Surcharge is 12% of income tax if Net income exceeds Rs 1 Crore. This rate is applicable for every Individual, members of Hindu Undived family, Partnership Firms, Co-operative Societies and Local authorities. For companies, i.e., Domestic company and Foreign company, Surcharge varies as shown below.

For Local authorities:

Surcharge on Income Tax for AY 2016-17 is 12%

Surcharge on Income Tax for AY 2017-18 is 15%

For Companies:

Surcharge for companies for Assessment year 2015-16 and Assessment year 2016-17 is applicable at the rates that are given below,

Companies

If net income does not exceed Rs. 1,00,00,000

If Net income is in the range of Rs 1 Crore to Rs. 10 Crore

If Net income is more than Rs. 10 Crore

AY 2015-16 and 2016-17

AY 2015-16

AY 2016-17

AY 2015-16

AY 2016-17

Domestic Company

Nil

5%

7%

10%

12%

Foreign Company

Nil

2%

2%

5%

5%

The surcharge rates for AY 2016-17 and Surcharge Rates for AY 2017-18 are same. The surcharge rates shown in above table for AY 2016-17 are applicable for AY 2017-18 also.

Education cess: It is 2% of Income Tax and Surcharge.

Secondary and Higher Education Cess: It is 1% of Income Tax and Surcharge.

How to calculate the Surcharge on Income Tax?

Example: Here in the below example, the surcharge is calculated assuming the Individual. Let us check the calculation of surcharge on income tax with an example in the following section.

If the Net Income is less than one crore,

Net Income Value

97,00,000

Total Tax payable as per Income Tax Slab Rates

2740000

Applicability of Surcharge

No

Surcharge @ 12%

Total Tax payable (including Surcharge)

2740000

Education Cess @ 2% & SHEC @ 1%

82200

Total Tax Payable (after Education Cess & SHEC)

2822200

If the Net income exceeds one crore,

Net Income Value

Rs. 1,30,00,000

Total Tax payable as per Income Tax Slab Rates

3730000

Applicability of Surcharge

Yes

Surcharge @ 12%

447600

Total Tax payable (including Surcharge)

4177600

Education Cess @ 2% & SHEC @ 1%

125328

Total Tax Payable (after Education Cess & SHEC)

4302928

Concept of Marginal Relief

For income one crore the surcharge will not be applicable. If the net income exceeds one crore, then the surcharge @ 12% is applicable as shown in below example,

Example:

Particulars

Case 1

Case 2

Net Income

10000000 (1 crore)

10100000 (1 crore 1 lakh)

Total Tax payable as per Income Tax Slabs

2830000

2860000

Applicability of Surcharge

No

Yes

Surcharge @ 12%

343200

Total Tax payable (including Surcharge)

2830000

3203200

Although in Case 2 the Income has only increased by Rs 1 Lakh, the total tax payable has increased by 373200 (3203200 -2830000). As the increased value 373200 is more than the actual increase in income above Rs. 1 crore, (i.e., 1 lakh) the concept of marginal relief would be applicable in this Case 2.

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For AY 17-18 , Individuals.
Is Dividend in excess of 10 lacs to be included in the Gross Total Income for Surcharge purposes. ?
For example a person earns say 15 lacs as dividend and 49 lacs other income .
Since 10 lacs dividend is exempt the taxable dividend amount is 10% on 5 lacs.
(QUESTION) However is Gross Total income= (49 + 5=54) or just 49 ie exclude dividend.
Reason for this question is that if Gross Income exceeds 50L then surcharge on tax is to be applied. So, is surcharge applicable or not in the above example. ?

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